It has now been three months since we began living according to a budget, and we are astounded with Godâ€™s kindness and graciousness to us. In that time, thanks to Godâ€™s faithful provision to us, we have been able to retire almost half of our debt (not counting the mortgage on our home). What seemed (just three months ago) to be an insurmountable and crippling debt, now appears to be a manageable amount we could potentially pay off in less than a year. I am reminded of Paul’s prayer benediction in Ephesians 3:20-21:
We’re down to 51%!
Now to him who is able to do immeasurably more than all we ask or imagine, according to his power that is at work within us, to him be glory in the church and in Christ Jesus throughout all generations, for ever and ever! Amen.
We have never been grossly foolish with our money, as far as I can remember. We conceal no illicit gambling habit, have bought no big-ticket luxury items, and have not squandered our wealth in foolhardy, get-rich-quick investments. But the steady attrition of self indulgence and inattention has landed us in the unenviable position of owing a sizeable amount of money. Frankly, we were scared when we finally added it up and took stock of how much we owed.
Thanks to some of Kathyâ€™s recent Dave Ramsey reading, and to the encouragement of many of our friends and relatives, we decided to make a few simple changes in our lives:
- We figured out how much our monthly bills would be (on average) and set aside money to pay them each month. These include our mortgage, utility bills (there seem to be an unending barrage of these), auto insurance and similar, predictable expenses.
- Kathy and I designed a budget to cover the remaining, more discretionary categories of spending, and (this is the important part) determined not to overspend in these areas. Such categories include groceries, household maintenance (light bulbs, shampoo, etc.), fuel, clothing (adult and child), homeschooling expenses, and (most precious of all) Tim and Kathyâ€™s Individual Unaccountable Funds (money that we can spend individually without having to get our spouseâ€™s buy-off). I spend a high proportion of my monthly allotment on gardening supplies and Slurpees (™), while Kathy prefers lattes and home decorating items. If, through inattention, we overspend in any area, Kathy and I contribute money from our personal funds to cover the overage.
- After hours of study and intensive economic research, we came up with a wild plan: we stopped using credit to cover our overspending. Oh, we still use a credit card for online purchases, but when we do, I fire off a check from our online banking that same day to cover the full amount of the credit card purchase. Then when the billing cycle is complete, we read those magical words: No Payment Due. Sometimes I get a little carried away paying off Chase or Bank of America, and actually end up with a small credit on my credit card statement, which stands the whole system on its ear. Imagine, actually having credit on a credit card. What’s more, if you leave a balance on the card long enough, they have to send you a check. While I donâ€™t advocate this as a crafty investment plan, it is sort of fun to get a check from a company whose mail you used to dread.
- Weâ€™ve trimmed and squeezed our monthly budget so that we could make steady payments against our debt. When we get extra money (which seems to happen a lot, lately), we often do something crazy: we use it to reduce our debt. We know it is un-American, but we just canâ€™t seem to help ourselves. As of this writing, weâ€™ve reduced our debt to 51% of what it was, only three months ago. We owe our humble thanks for this to our Lord, Jesus Christ, who has helped us to pay this down so quickly.
As victorious as we feel, it hasnâ€™t all been a bowl of cherries. It hurts not to be able to spend in a carefree fashion, and it takes time (mostly on Kathyâ€™s part) to record each and every transaction, and to monitor the dwindling monthly funds in each category. Both of us have had to swallow some of our pride as we learn to live within our means.
Weâ€™re also conscious of how pathetic we must seem, to some of our friends and relatives who have faithfully stuck to a budget for decades. It is interesting to watch our children learn from our mistakes and rapidly adapt our new-found budgeting skills. I was talking with Joshua the other day about the principle of setting aside an emergency fund before saving for a discretionary purchase.
Not Joshua’s actual savings.
â€œHowâ€™d you decide how much you would establish as your emergency fund,â€ I asked him, wondering what he would consider an emergency.
â€œI decided to set aside the $160 I would need if there was a sudden youth group retreat that I wanted to attend,â€ he informed me. â€œThat way I still could go, even if I hadnâ€™t known in advance to save for it, or if all my other sources of income suddenly dried up.â€
Rachel has been hinting about getting a cell phone for some time. I told her she could have one as soon as she could (a) buy the phone, and (b) pay me, up-front, two monthâ€™s reserve to cover the cost of her plan. Dave Ramsey talks about a â€˜gazelle-like intensityâ€™ in paying down debt â€“ Rachel left all the gazelles milling around the starting gate in her rush to save enough money to get a phone.
“Hey,” says one gazelle to another. “What was that pink flash?”
Fortunately for Rachel, my employer (just this month!) increased the value of my cell phone perquisite so that the monthly fees for another cell line are quite reasonable.
â€œHereâ€™s the money, Dad,â€ she informed me (rather smugly) a couple of days after I had set out the requirements. â€œIâ€™ve saved up my babysitting money and Iâ€™m ready to buy a phone.â€ So much for that strategy to slow her down.
Rachel spent at least 10 hours playing with her phone before the account was even activated.
One interesting development is that our spending categories have begun to acquire personalities. Fuel, for example, is a burly, simple man who lives in the moment and doesnâ€™t have to worry about the future. â€œNext month is Vehicle Maintenanceâ€™s problem,â€ he chuckles, confidently. Since Iâ€™ve started van-pooling to work, the end of the month holds no terror for him.
Groceries, on the other hand, is a thin, melancholy woman with low self-esteem, who wishes every month were February, (not on a leap year). â€œHow can I possibly make it to the end of June when Iâ€™ve already spent two-thirds of my budget by the eighth day of the month?â€ she wails.
We talk about them as though they were people. “I don’t think Households wants to pay for that,” Kathy warns.
“How ’bout Kid’s Clothing then, he’s got lots of dough,” I fire back, while Kathy laughs maniacally. (Kid’s Clothing is a chronically under-funded waif with a starvation-swollen belly, who philosophically and somewhat apathetically takes whatever life throws his way.)
As much as it pinches to restrict my discretionary spending, it is fun to be able to spend without guilt. The other day I bought some gardening supplies out of Timâ€™s Unaccountable Fund, and I didnâ€™t have to worry about justifying the expense to Kathy, or feeling bad about borrowing the money to pay for my hobby. Kathy and I also look forward to the day when we no longer must allocate 10% – 20% of our income to paying down our debt â€“ Iâ€™m sure we can find something to do with that extra money every month — maybe we could buy some Teriyaki take-out for Kid’s Clothing.
Project 366, Day 183